Opinionated @ CFE

Are Utah's federal fights worth it?

Apr
17

This last legislative session ended in Utah trying to pick some big fights with the federal government. From seizing federal land to bucking federal gun regulations to suing to stop the health care bill that just passed, our legislature and AG are digging in for a knock-down brawl. A lot of criticism has been leveled at them for the expense of these fights, but I’m starting to wonder if the potential payout isn’t worth it.

Consider the cost of unfunded state mandates currently coming down the pipe. Sen. Steve Urquhart places the state’s cost of this Medicaid expansion somewhere in the $200M+ per year range. That’s a lot of scratch for a state that’s had to cut like mad the last few years and works out to around $286 per household per year. Utah can’t take out loans or print money like the feds can, so it’s going to have to come from someone. Someone like you and me. I’m sure that once states start having to actually find the money, the feds will just pull out the China National Bank Visa card and rack up yet another huge charge, but that hardly seems feasible when we’re already dropping trillions per year in debt onto the balance.

Utah really only has three choices before them. The first is to drop out of Medicaid entirely and no longer be subject to the mandates being handed down. That seems politically unrealistic because while we’re collectively very loud about decrying federal assistance programs, we sure do love to use them. Killing off Medicaid is about as likely as ending Trax service.

The second is to figure out a way to get the $200M in funding from a combination of cutting spending and raising taxes. While there’s definitely some fat to be cut from state budgets, I don’t think we can find the money from spending cuts alone. Raising taxes across the board is also untenable right now as Utah already has a relatively high tax burden. It doesn’t seem like raising the revenue would be possible, either practically or politically.

The third option is to spend a few million dollars fighting the mandates regardless of the odds of success. Since neither of the other two options seems practical or possible, I don’t know that the state has a whole lot of other options. If they do, I’m all ears.

There’s also a lot of consternation at the eminent domain bill that sailed through the legislature. In a nutshell, the state gave itself the authority to seize any federal lands that it doesn’t think should be federal lands anymore. While I am most definitely in favor of the outcome of federal lands devolving to state control, I have a hard time seeing how this particular action can pass legal muster.

Congress, in Article IV, Section 3 of the US Constitution, is given sole power to set conditions of admittance upon states and regulate federal territories. As an exercise of this power, Congress passed the Utah Enabling Act in 1894 specifying the conditions of admittance to the Union. A large portion of this document details just how much land would be given to the state, the purposes for much of that land, and a requirement that the state be given 5% of all sale proceeds to build an interest-bearing account for public education. It’s pretty dry reading (only slightly more exciting than a dictionary), but I can’t seem to find a whole lot in there dictating that federal land should be devolved back to state control.

I think the entire thing is going to hinge upon a number of historical land acts passed by Congress over the course of almost two centuries beginning with the Harrison Land Act of 1800. This established the parameters around which federal land could be purchased by interested parties and was later amended by the Land Act of 1804 to allow homesteads of 320 acres, half the original size. This legislation was in place at the time the Utah Territory was organized. While that sounds like a lot of land, it isn’t so great if you happen to be in a water-parched western state and makes the creation of a viable farm difficult or impossible. If you look at the relative amount of federal land in each state, there is a definite relationship between federal land ownership and scarcity of water. This problem was only exacerbated when then Homestead Act of 1862 further shrunk the size of parcels to a mere 160 acres, extending the Preemption Act of 1841 to everyone, not just squatters. The final nail in the coffin was the Federal Land Policy and Management Act of 1976 which stopped the process of homesteading entirely. In addition to these acts of Congress, various Executive Orders forbade certain tracts of land from being considered for homesteading within a decade of Utah’s formation, many of them close to water sources.

So what does this mean to Utah? The APPLE Initiative intended to answer that question back in 2002. It found that Utah was losing out on around $836M in one-time revenues and $214M in annual property tax revenues, more than enough to cover that big increase in Medicare discussed earlier. Given the size of the prize, it’s no wonder Utah sees fit to spend a few million dollars trying to redefine the role of federal land management in the state. Even securing a very small portion of the lands in dispute would more than pay for the suit. I imagine that the argument would be that by failing to execute the expected sale of federal lands in the state, the federal government acted in bad faith relative to the state and the preceding territory thus depriving the state of billions (or possibly trillions) of dollars in one-time and ongoing revenues.

This isn’t just about money, though. In the larger scope, this is an effort to redefine the relationship between the states and the federal government. By and large, the feds have acted as if they have a blank check to do what they wish and demand whatever they want from the states. I don’t think that this is necessarily a healthy relationship and the adversarial dynamic inhibits cooperation between the parties. It only worsened when states no longer had representation in the federal government. A bit of pushback is a healthy thing in the long term and states would do well to learn how to say no.

2 Responses to Are Utah's federal fights worth it?

  1. Ronald D. Hunt

    Utah can’t actually afford to opt out of Medicaid, as much as they complain about medicaid they know darn well that without it the cost shift from uncompensated care would increase insurance premiums and likely cause hospital/doctor financial problems.

    Increases in insurance premiums to pay for higher hospital and doctor rates to cover uncompensated care costs would push even more people out of the insurance system and create a self perpetuating circular problem.

    The very circular problem outlined above exists with medicaid in place as the cost growth in health care has started pushing lower middle class and middle middle class people out of their insurance as is.

    If you read my posts on Steve Urquharts blog, you can see just how idiotic the costs of the system are, either we need to go the libertarian route and repeal the 1974 law requiring emergency rooms to stabilize/treat anyone that enters or we go the liberal/progressive route to a universal health care system(something that Obamacare isn’t).

    Currently its just a matter of time until our system eats itself or we have to pass another Obamacare style “patch” to make it work for a few more years.

  2. I hadn’t actually thought of it in terms of that kind of death spiral before. And I think you may be right that those two solutions might be the last ones on the table. Thanks for the insights.

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